5 Jun 2012

The Pernicious Dynamics of Debt, Deleveraging, and Deflation

Submitted by ChrisMartenson.com contributing editor Charles High Smith

The Pernicious Dynamics Of Debt, Deleveraging, and Deflation
At this moment, the news media is constantly clamoring about the "Three Ds" that are buffeting the markets: debt, deleveraging, and deflation. We intuitively sense that they're linked -- but how, exactly?
Understanding this linking is critical; as debt has fueled the global expansion, it will also dominate its contraction.

Debt and Deleveraging

To illustrate the forces of debt and deleveraging, let’s consider a home mortgage.

SilverFuturist: Stealing silver with ZIRP +

Zero Interest Rate Policy (ZIRP)
Step 1: embrace Keynsiasm, fiat currency, ZIRP, etc
Step 2: borrows billions out of thin air and pay no interest on it
Step 3: put money in assets going up (which will help it go up further)
Step 4: sell asset after it goes up, crashing the price
Step 5: pay back ZIRP loan
Step 6: if you screw up, taxpayer bails you out
Step 7: repeat process until you own everything
Step 8: When system crashes, go back on gold standard and pretend to embrace free markets, cuz you now own them all

Artist Taxi Driver's Jubilee: Slave Labourers Sleep Under a Bridge - Pageant, the Royal Flotilla - House Negroes

The Artist Taxi Driver

"Terror-Mongering" in Greece About to Backfire? Will Greeks Vote for "Complete Idiots"? Four Possibilities - Mish

The Financial Times reports Greek right a hostage to its own failures
On June 17, Stathis Potamitis, managing partner at an Athens law firm, plans to break a promise he has kept since his participation in a 1970s clandestine student group that opposed Greece’s military dictatorship. He will vote for the right. “I’m now driven to the dreadful situation of having to vote for this man who is one of the causes of the problems we have right now,” he says, referring to Antonis Samaras, New Democracy’s leader. 
His friend, Niki Siropoulou, a marketing executive, is more succinct. 
I have to vote for a complete idiot,” she says.

Polls show New Democracy running a close race with Syriza – but it is hardly inspiring. Terror-mongering will only get you so far,” Mr Potamitis complains.

Economic Collapse for Dummies and The Dummies

Cypherpunks "Lock and Load with Unbreakable Code" in The Julian Assange Show

Cyber threats, hacker attacks and laws officially aiming to tackle internet piracy, but in fact infringing people's rights to online privacy. It's an increasingly topical subject - and the world's most famous whistleblower is aiming to get to the heart of it. In the latest edition of his interview program here on RT, Julian Assange gets together with activists from the Cypherpunk movement - Andy Müller-Maguhn, Jeremie Zimmermann, and Jacob AppelbaumSource

Max Keiser: Bilderberg European Vacation of Financial Ruin

Patrick Henningsen talks with top financial guru Max Keiser in London about this week's Bilderberg meeting in Chantilly, VA and how Bilderberg factors into the Greek euro crisis and current global financial meltdown. Source

Paper Money Collapse - Detlev Schlichter with Max Keiser

All hell breaking loose as an electronics chain store stockpiles security shutters, capital flees Greece (and Spain) and Max proposes a love market. In the second half of the show Max talks to Detlev Schlichter, author of Paper Money Collapse, about the euro, the drachma, the dollar and gold. Source

The U.S. military is operating drones domestically and sharing data with law enforcement

By Madison Ruppert:
As many are now well aware, the Federal Aviation Administration (FAA) is pushing for the integration of drones into the national airspace, especially for use by law enforcement and unsurprisingly a bill was passed and signed into law doing just that.
This is disturbing to some, for good reason. It has become clear that when you give the federal government an inch, they will take a mile. This can be seen quite plainly in the so-called war on terror and how the Department of Homeland Security (DHS) has rapidly expanded into a massive agency which regularly violates our rights.
It can also be seen in how some entities will simply give themselves ludicrous powers over the personal information of Americans, such as the National Counterterrorism Center (NCTC), which not long ago gave itself the power to keep the personal information of Americans – with absolutely no links to terrorism whatsoever – for a whopping five years.

Howard Stern's Hilarious Stock Market Rant

"My stockbroker thought the cold war was in Iceland"

21 Signs That This Could Be A Long, Hot, Crazy Summer For The Global Financial System

The summer of 2012 is shaping up to be very similar to the summer of 2008.  Things look incredibly bleak for the global economy right now.  Economic activity and lending are slowing down all over the planet, and fear is starting to paralyze the entire global financial system.  Things did not look this bad back in the summer of 2011 and things certainly did not look this bad back in the summer of 2010.  It is almost as if a "perfect storm" is brewing.  Today, the global financial system is a finely balanced pyramid of risk, debt and leverage.  Such a system requires a high degree of confidence and stability.  But when confidence disappears and fear and panic take over, the house of cards can literally start collapsing at any time.  Right now we are watching a slow-motion train wreck unfold and nobody seems to know how to stop it.  Unless some kind of a miracle happens, things are going to look much different when we reach the start of 2013 than they do today.
The following are 21 signs that this could be a long, hot, crazy summer for the global financial system....
#1 There are rumors that major financial institutions are cancelling employee vacations in anticipation of a major financial crisis this summer.  The following are a couple of tweets quoted in a recent article by Kenneth Schortgen Jr....
Todd Harrison tweet: Hearing (not confirmed) @PIMCO asked employees to cancel vacations to have "all hands on deck" for a Lehman-type tail event. Confirm?
Todd M. Schoenberger tweet: @todd_harrison @pimco I heard the same thing, but I also heard the same for "some" at JPM. Heard it today at a hedge fund luncheon.

Robert Prechter on the Bullishness of an EU Breakup and the coming Global Deflation

Billionaire hedge fund manager George Soros says the EU is like a bubble and authorities will not be able to meet the demands of the market coming up. It doesn't keep Eurocrats from pushing for new master integration plans. But are they doomed to fail when the mood is this negative? Was the very formation of the EU made possible by a secular bull market and the psychology that accompanies it? We are talking about bull market mania. RobertPrechter, founder of Elliot Wave International, joins us to explain.